Sentiment turns down
The AFR
reported this morning another major test looming for private credit after a Chinese developer defaulted on a $270 million loan, leaving a mega-development site in Sydney - long slated for 3,600 apartments near Olympic park - to be sold off, potentially at a significant loss.
It all appears to be unravelling very fast in the sector, so watch this space.
The Westpac-MI consumer sentiment survey showed sentiment diving -5.2 per cent lower in September, back down to a reading of 84.4 this month, as consumers sense that interest rates are going higher again, partly fuelled by government spending.
Source: Westpac, Melbourne Institute
For the housing market, the 'time to buy a dwelling' index pulled back accordingly, although it remains well off the cycle lows, while house price expectations also continued to decline.
Shane Oliver of AMP charted the trends:
Source: Shane Oliver, AMP
It'll likely be an interesting test for the Federal government over the next few months, given that various challenging tax reforms were pushed through, despite them not being touted in the election campaign.
Popularity for Australian Prime Ministers generally tends to peak in the first 3 to 6 months of taking office - towards the end of the traditional honeymoon period - so it wouldn't necessarily a surprise to see Labor's primary vote polling ebbing somewhat as the PM is well into his 5th year in office.
Over the past week or two, however, polling seems to have taken a nasty turn lower as the impacts of the Federal Budget and persistently high inflation begin to flow through.
Roy Morgan saw Labor's primary vote as down to 27 per cent (-2.5), while Essential reported a 26 per cent (minus 5 percentage points) primary, and then yesterday YouGov also recorded a 26 per cent (-3) poll.
As previously seen with 'The Voice' referendum, it can be devilishly tricky to arrest downtrends like this once they take hold.
Unfortunately for the government, economists from all 4 of the major banks are now calling for the Reserve Bank of Australia to hike interest rates for a fourth time in this cycle before the year is out, which will surely see polling take further hit if it eventuates.
Source: ASX
Previously I'd have guessed that populism wouldn't be such a strong bet in Australia, but after seeing the German landslide election result this week anything seems possible.
It wouldn't be a surprise if the opposition parties run their 2028 campaigns on reversing the minimum 30 per cent rate for capital gains taxes, the minimum 30 per cent tax on discretionary trust distributions, and negative gearing being limited to new build homes only.
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